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v3.23.1

FINANCIAL INSTRUMENTS | 3 Months Ended
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Mar. 31, 2023
Investments, All Other Investments [Abstract] |
FINANCIAL INSTRUMENTS | FINANCIAL INSTRUMENTS Cash, Cash Equivalents, and Investments The following tables summarize the Company’s cash and available-for-sale debt securities’ amortized cost, gross unrealized gains, gross unrealized losses, allowance for credit loss, and fair value by significant investment category reported as cash and cash equivalents, short-term investments, or long-term investments as of March 31, 2023, and December 31, 2022 (in millions):
|  |  |  |  |  |  |  |  |  |  | Reported as:
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Allowance for Credit Loss |  | Fair Value |  | Cash and Cash Equivalents |  | Short- term Investments |  | Long- term Investments
March 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash | $ | 605.2 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 605.2 |  |  | $ | 605.2 |  |  | $ | — |  |  | $ | — |
Level 1: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds | 1,537.8 |  |  | — |  |  | — |  |  | — |  |  | 1,537.8 |  |  | 1,537.8 |  |  | — |  |  | — |
U.S. treasuries | 2,279.0 |  |  | — |  |  | (69.7) |  |  | — |  |  | 2,209.3 |  |  | — |  |  | 1,522.6 |  |  | 686.7 |
Subtotal | 3,816.8 |  |  | — |  |  | (69.7) |  |  | — |  |  | 3,747.1 |  |  | 1,537.8 |  |  | 1,522.6 |  |  | 686.7 |
Level 2: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate debt securities | 1,789.2 |  |  | — |  |  | (60.3) |  |  | (1.1) |  |  | 1,727.8 |  |  | — |  |  | 769.6 |  |  | 958.2 |
U.S. government agencies | 400.4 |  |  | — |  |  | (15.3) |  |  | — |  |  | 385.1 |  |  | — |  |  | 210.5 |  |  | 174.6 |
Municipal securities | 118.2 |  |  | — |  |  | (4.8) |  |  | — |  |  | 113.4 |  |  | — |  |  | 46.5 |  |  | 66.9 |
Subtotal | 2,307.8 |  |  | — |  |  | (80.4) |  |  | (1.1) |  |  | 2,226.3 |  |  | — |  |  | 1,026.6 |  |  | 1,199.7 |
Total assets measured at fair value | $ | 6,729.8 |  |  | $ | — |  |  | $ | (150.1) |  |  | $ | (1.1) |  |  | $ | 6,578.6 |  |  | $ | 2,143.0 |  |  | $ | 2,549.2 |  |  | $ | 1,886.4 |
|  |  |  |  |  |  |  |  |  |  | Reported as:
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Allowance for Credit Loss |  | Fair Value |  | Cash and Cash Equivalents |  | Short- term Investments |  | Long- term Investments
December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash | $ | 497.2 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 497.2 |  |  | $ | 497.2 |  |  | $ | — |  |  | $ | — |
Level 1: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds | 1,084.0 |  |  | — |  |  | — |  |  | — |  |  | 1,084.0 |  |  | 1,084.0 |  |  | — |  |  | — |
U.S. treasuries | 2,715.2 |  |  | — |  |  | (96.6) |  |  | — |  |  | 2,618.6 |  |  | — |  |  | 1,542.4 |  |  | 1,076.2 |
Subtotal | 3,799.2 |  |  | — |  |  | (96.6) |  |  | — |  |  | 3,702.6 |  |  | 1,084.0 |  |  | 1,542.4 |  |  | 1,076.2 |
Level 2: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial paper | 20.0 |  |  | — |  |  | — |  |  | — |  |  | 20.0 |  |  | — |  |  | 20.0 |  |  | — |
Corporate debt securities | 2,022.0 |  |  | — |  |  | (76.0) |  |  | (1.1) |  |  | 1,944.9 |  |  | — |  |  | 651.8 |  |  | 1,293.1 |
U.S. government agencies | 447.2 |  |  | — |  |  | (19.9) |  |  | — |  |  | 427.3 |  |  | — |  |  | 247.8 |  |  | 179.5 |
Municipal securities | 155.5 |  |  | — |  |  | (6.0) |  |  | — |  |  | 149.5 |  |  | — |  |  | 74.7 |  |  | 74.8 |
Subtotal | 2,644.7 |  |  | — |  |  | (101.9) |  |  | (1.1) |  |  | 2,541.7 |  |  | — |  |  | 994.3 |  |  | 1,547.4 |
Total assets measured at fair value | $ | 6,941.1 |  |  | $ | — |  |  | $ | (198.5) |  |  | $ | (1.1) |  |  | $ | 6,741.5 |  |  | $ | 1,581.2 |  |  | $ | 2,536.7 |  |  | $ | 2,623.6 |
The following table summarizes the contractual maturities of the Company’s cash equivalents and available-for-sale debt securities (excluding money market funds), as of March 31, 2023 (in millions):
| Amortized Cost |  | Fair Value
Mature in less than one year | $ | 2,602.1 |  |  | $ | 2,549.2 |
Mature in one to five years | 1,984.7 |  |  | 1,886.4 |
Total | $ | 4,586.8 |  |  | $ | 4,435.6 |
Actual maturities may differ from contractual maturities, because certain borrowers have the right to call or prepay certain obligations. Gross realized gains and losses recognized on the sale of investments were immaterial for the periods presented. As of March 31, 2023, and December 31, 2022, net unrealized losses on available-for-sale debt securities, net of tax, of $116.6 million and $154.2 million, respectively, were included in accumulated other comprehensive loss in the accompanying Consolidated Balance Sheets. The following tables present the breakdown of the available-for-sale debt securities with unrealized losses as of March 31, 2023, and December 31, 2022 (in millions):
| March 31, 2023
| Unrealized losses less than 12 months |  | Unrealized losses 12 months or greater |  | Total
| Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
U.S. treasuries | $ | 71.7 |  |  | $ | (0.8) |  |  | $ | 2,137.6 |  |  | $ | (68.9) |  |  | $ | 2,209.3 |  |  | $ | (69.7) |
Corporate debt securities | 159.6 |  |  | (2.0) |  |  | 1,550.3 |  |  | (58.3) |  |  | 1,709.9 |  |  | (60.3) |
U.S. government agencies | 9.7 |  |  | (0.3) |  |  | 375.4 |  |  | (15.0) |  |  | 385.1 |  |  | (15.3) |
Municipal securities | — |  |  | — |  |  | 113.4 |  |  | (4.8) |  |  | 113.4 |  |  | (4.8) |
Total | $ | 241.0 |  |  | $ | (3.1) |  |  | $ | 4,176.7 |  |  | $ | (147.0) |  |  | $ | 4,417.7 |  |  | $ | (150.1) |
| December 31, 2022
| Unrealized losses less than 12 months |  | Unrealized losses 12 months or greater |  | Total
| Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
U.S. treasuries | $ | 731.7 |  |  | $ | (26.0) |  |  | $ | 1,886.9 |  |  | $ | (70.6) |  |  | $ | 2,618.6 |  |  | $ | (96.6) |
Corporate debt securities | 631.4 |  |  | (17.6) |  |  | 1,221.9 |  |  | (58.4) |  |  | 1,853.3 |  |  | (76.0) |
U.S. government agencies | 102.7 |  |  | (4.4) |  |  | 324.6 |  |  | (15.5) |  |  | 427.3 |  |  | (19.9) |
Municipal securities | 44.6 |  |  | (1.1) |  |  | 104.9 |  |  | (4.9) |  |  | 149.5 |  |  | (6.0) |
Total | $ | 1,510.4 |  |  | $ | (49.1) |  |  | $ | 3,538.3 |  |  | $ | (149.4) |  |  | $ | 5,048.7 |  |  | $ | (198.5) |
The Company’s investments may consist of money market funds, U.S. treasury and U.S. government agency securities, high-quality corporate notes and bonds, commercial paper, non-U.S. government agency securities, and taxable and tax-exempt municipal notes. The Company regularly reviews its investments and evaluates the current expected credit loss by considering factors such as historical experience, market data, financial condition and near-term prospects of the investee, the extent of any losses related to the credit of the issuer, and the expected cash flows from the security. The Company segments its portfolio based on the underlying risk profiles of the securities and has a zero-loss expectation for U.S. treasury and U.S. government agency securities. The basis for this assumption is that these securities have consistently high credit ratings by rating agencies, have a long history with no credit losses, are explicitly guaranteed by a sovereign entity, which can print its own currency, and are denominated in a currency that is routinely held by central banks, used in international commerce, and commonly viewed as a reserve currency. The current unrealized losses on the Company’s available-for-sale debt securities were caused by interest rate increases. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. As of March 31, 2023, the Company does not intend to sell the investments in unrealized loss positions, and it is not more-likely-than-not that the Company will be required to sell any of the investments before recovery of their amortized cost basis, which may be at maturity. Therefore, the Company does not expect to realize any losses on these available-for-sale debt securities. Additional factors considered in determining the treatment of unrealized losses include the financial condition and near-term prospects of the investee, the extent of the loss related to the credit of the issuer, and the expected cash flows from the security.For the three months ended March 31, 2023, and 2022, credit losses related to available-for-sales debt securities were not material. Equity Investments The Company holds equity investments with readily determinable fair values and equity investments without readily determinable fair values. The Company generally recognizes equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The following table is a summary of the activity related to equity investments (in millions):
|  |  |  |  |  |  |  |  | Reported as:
| December 31, 2022 Carrying Value |  | Changes in Fair Value (1) |  | Purchases / Sales / Other (2) |  | March 31, 2023 Carrying Value |  | Prepaids and other current assets |  | Intangible and other assets, net
Equity investments with readily determinable value (Level 1) | $ | 4.3 |  |  | $ | (0.4) |  |  | $ | (2.7) |  |  | $ | 1.2 |  |  | $ | 1.2 |  |  | $ | — |
Equity investments without readily determinable value (Level 2) | $ | 59.1 |  |  | $ | 0.5 |  |  | $ | 4.0 |  |  | $ | 63.6 |  |  | $ | — |  |  | $ | 63.6 |
(1) Recorded in interest and other income (expense), net.
(2) Other includes foreign currency translation gains/(losses).
For the three months ended March 31, 2023, the Company recognized a decrease in fair value of $0.4 million on its equity investments with readily determinable market values (Level 1), which was reflected in interest and other income (expense), net. For the three months ended March 31, 2023, the Company recognized an increase in fair value of $0.5 million due to changes in observable prices for certain equity investments that lack readily determinable market values (Level 2), which was also reflected in interest and other income (expense), net.There were no decreases in fair value reflected in net income due to impairments. Foreign Currency Derivatives The objective of the Company’s hedging program is to mitigate the impact of changes in currency exchange rates on net cash flow from foreign currency-denominated sales, expenses, intercompany balances, and other monetary assets or liabilities denominated in currencies other than the U.S. dollar (“USD”). The terms of the Company’s derivative contracts are generally twelve months or shorter. The derivative assets and liabilities are measured using Level 2 fair value inputs. Cash Flow Hedges The Company enters into currency forward contracts as cash flow hedges to hedge certain forecasted revenue transactions denominated in currencies other than the USD, primarily the Euro (“EUR”), the British Pound (“GBP”), the Japanese Yen (“JPY”), the Korean Won (“KRW”), and the New Taiwan Dollar (“TWD”). The Company also enters into currency forward contracts as cash flow hedges to hedge certain forecasted expense transactions denominated in EUR and the Swiss Franc (“CHF”). For these derivatives, the Company reports the unrealized after-tax gain or loss from the hedge as a component of accumulated other comprehensive loss in stockholders’ equity and reclassifies the amount into earnings in the same period in which the hedged transaction affects earnings. The amounts reclassified to revenue and expenses related to the hedged transactions and the ineffective portions of cash flow hedges were not material for the periods presented. Other Derivatives Not Designated as Hedging Instruments Other derivatives not designated as hedging instruments consist primarily of forward contracts that the Company uses to hedge intercompany balances and other monetary assets or liabilities denominated in currencies other than the USD, primarily the EUR, GBP, JPY, KRW, CHF, TWD, Indian Rupee (“INR”), Mexican Peso (“MXN”), Chinese Yuan (“CNY”), and Canadian Dollar (“CAD”). These derivative instruments are used to hedge against balance sheet foreign currency exposures. The related gains and losses were as follows (in millions):
| Three Months Ended March 31, |  |
| 2023 |  | 2022 |  |  |  |
Recognized gains (losses) in interest and other income (expense), net | $ | (3.3) |  |  | $ | 6.8 |  |  |  |  |
Foreign exchange gains (losses) related to balance sheet re-measurement | $ | 5.4 |  |  | $ | (10.1) |  |  |  |  |
The notional amounts for derivative instruments provide one measure of the transaction volume. Total gross notional amounts (in USD) for outstanding derivatives and the aggregate gross fair value at the end of each period were as follows (in millions):
| Derivatives Designated as Hedging Instruments |  | Derivatives Not Designated as Hedging Instruments
| March 31, 2023 |  | December 31, 2022 |  | March 31, 2023 |  | December 31, 2022
Notional amounts: |  |  |  |  |  |  |
Forward contracts | $ | 222.9 |  |  | $ | 188.4 |  |  | $ | 513.3 |  |  | $ | 496.3 |
Gross fair value recorded in: |  |  |  |  |  |  |
Prepaids and other current assets | $ | 2.8 |  |  | $ | 1.8 |  |  | $ | 1.7 |  |  | $ | 4.3 |
Other accrued liabilities | $ | 3.4 |  |  | $ | 5.3 |  |  | $ | 3.6 |  |  | $ | 4.2 |

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